In the early days of his administration, Brazilian President Jair Bolsonaro announced plans to privatise several of the country's largest state-owned enterprises and airports. Fearing such a move would lower both wages and employment, labour unions organised in opposition to Bolsonaro’s plans. This column looks anew at evidence testing whether privatisation offers more than merely an immediate infusion of revenue, and finds that while increases in efficiency might contribute to Brazil’s overall economic growth, privatisation could also expose the country’s most vulnerable workers to significant risk of decreased wages.

The recent political crisis in the euro area has brought the design of fiscal policy to the forefront of public debate, with many arguing that EU-level transfers are necessary for the ‘completion’ of EMU. This column uses extensive data from a Brazilian federal transfer scheme to show that transfers can play a valuable stabilisation role in a currency union.

Local economic shocks induced by the Brazilian trade liberalisation had substantial effects on homicides. This column examines these effects and attempts to disentangle the mechanisms through which they occurred. Reductions in employment rates appear to have been the main driving force.

The effects of foreign competition have been shown to vary substantially across regions within a country. Using administrative and household survey data from Brazil, this column examines the various margins of adjustment in response to trade-induced regional shocks. The results demonstrate a key role for the non-tradable sector and informal employment in the adjustment process.

A large literature has argued that natural resources have a negative effect on economic development. The Brazilian data used in this column fail to confirm these findings. Economic activity, as measured using night-time light data, increases more during periods of rising oil prices in localities with better access to oil. Oil revenue windfalls accruing to oil-rich locations and spillovers to adjacent locations drive this effect.

A recent literature has shown that successful firms have in common a deliberate and active management of their internal structure. This column uses an export promotion programme in Brazil that provided consulting on management and production practices to small and medium enterprises to examine whether policies can prompt and support firm reorganisations. It finds that firms participating in the programme were 20% more likely to add a new layer of workers with more specialised skills and competencies.

The extraordinary expansion in global mining activity over the last two decades, and its increasing concentration in emerging markets, has reignited the debate over the impact of mining on local economic activity. This column analyses how the presence of nearby mines influences firms in eight countries with large manufacturing and mining sectors. Mines are found to out-compete local manufacturing firms for inputs, labour, and infrastructure. However, mining activity is found to improve the business environment on a wider geographic scale.

Argentina and Brazil began to open their markets to the world significantly – but only partially – in the 1990s. Yet these countries’ efforts to liberalise beyond their Latin American trading partners have stalled since 1995. This column re-examines the 1990s MERCOSUR experience and raises questions over just how much trade policy cooperation these two countries have undertaken. This lack of coordination also has implications for the ‘building blocks’ versus ‘stumbling blocks’ debate in trade policy.

Mining companies have high economic growth. In this video, Liesel Filgueiras discusses the responsibility of mining companies for the development of local municipalities. Most of the revenues go directly to federal governments, leaving little benefits to the industry for local communities. Cross-sector and local government partnerships need to de developed to ensure the investment of the revenues to build public policies. This video was recorded during the International Growth Centre’s annual conference held in London in June 2016.

Cluster development programmes (CDPs) aim to support industrial clusters of agglomerated firms to achieve higher productivity and sustainable development. Such programmes have been prominent in Latin America over the past decade, but there have been few impact evaluations. This column presents the findings from an evaluation of Latin American CDPs. Various case studies show positive medium-term effects of the programmes on employment, exports, and wages. CDPs are also found to have positive spillover effects on untreated firms, and to improve the network connectivity and technology-transfer ties between firms.

Stress and violence during the nine months in utero has been widely shown to have important effects on child development. To date this research has largely focused on extreme and relatively rare events. This column uses data from Brazil to explore how exposure to day-to-day violence can affect birth weight. The birth weight of newborns whose mothers are exposed to a homicide during their first trimester is significantly lower. This effect is smaller for mothers who live in more violent neighbourhoods, consistent with the interpretation that violence is more stressful when it is rare.

Capital controls are back in fashion. This column discusses new firm-level evidence from Brazil showing that capital controls segment international financial markets, reduce external financing, and lower firm-level investment. They disproportionately affect small, non-exporting firms, especially those more dependent on external finance. This suggests that macro-finance models focusing on aggregate variables are missing an important dimension by abstracting from firm-level heterogeneity.

While Brazil has become one of the largest economies in the world, it remains among the most closed economies as measured by the share of exports and imports in GDP. This column argues that this cannot be explained simply by the size of Brazil’s economy. Rather it is due to a reliance on domestic value chain integration as opposed to participation in global production networks. Greater trade openness could produce efficiency gains and help Brazil address its productivity and competitiveness challenges.

Brazil has grown rapidly and reduced poverty over the past decade, but it has grown more slowly than other emerging economies and its income per capita remains relatively low by global standards. This column points out that sectors of the Brazilian economy that have been opened up to international competition have outperformed those that remain heavily protected. Deeper integration into global markets and value chains could provide competitive pressures that would improve Brazil’s productivity and living standards.

Institutions are known to play a powerful and enduring role in countries’ divergent levels of economic development. This column presents evidence that institutions matter for within-country inequality, too. In Brazil, changes in export prices and export tax revenues led to an increase in education spending in states that experienced commodity booms, which increased the number of schools and improved educational outcomes such as literacy rates. However, the effect was limited in states where slavery was predominant in colonial times.

Capital controls may help countries limit large and volatile capital inflows, but they may also have spillover effects on other countries. This column discusses recent research showing that inflow restrictions have significant spillover effects as they deflect capital flows to countries with similar economic characteristics.

The 2014 FIFA World Cup is upon us. This column argues that there will be plenty of partying, but also plenty of protests fuelled by the gross mismanagement and limited economic benefits from hosting the Cup. Stadia may be ready, but much planned infrastructure has already been abandoned. Indeed, rent-seeking may be one reason nations bid for the Cup. Since the returns to transportation infrastructure are higher in poor countries, the international community should work to stamp out corruption so that poor countries can continue to host mega-events like the World Cup.

Government interventions to control capital flows and reduce exchange-rate volatility have long been controversial. The Global Financial Crisis has made the debate more urgent. This column discusses recent research that evaluates such policies against the counterfactual of no intervention. Depreciations and reserve sales can boost GDP growth during crises, but may also substantially increase inflation. Large increases in interest rates and new capital controls are associated with reductions in GDP growth, with no significant effect on inflation. When faced with sudden shifts in capital flows, policymakers must ‘pick their poison’.

The recent reversal of capital flows to emerging markets raises the question of whether and how to intervene in currency markets. Brazil’s central bank has intervened heavily, spending more than $50 billion and promising to double that by the end of the year. However, almost all of that intervention has taken place in onshore derivative markets that settle in real. This column argues that such interventions can be effective, but that central banks must stand ready to use their foreign-exchange reserves if necessary.

Emerging markets are under pressure. This column argues that this is not a mere headwind but that the BRICs’ party is over. Their ability to get going again rests on their ability to carry through reforms in grim times for which they lacked the courage in a boom.